City trims capital works plan over funding mixup

St. John’s has cut spending on its three-year capital works program after discovering money allocated by the provincial government has to cover taxes.

St. John's City Hall. — file photo

City manager Neil Martin’s report to council at Tuesday’s meeting said the city learned earlier this year the provincial government would contribute $40.9 million in funding for its 2015-17 capital works program.

“Subsequent discussions were held with staff at the province in which the city was instructed that the $40.9M was exclusive of all taxes,” Martin wrote in a report dated June 17.

“The city has now been advised that the $40.9 million was already net of GST,” Coun. Danny Breen, chairman of the city’s finance committee, said at the council meeting.

It’s a difference of a few million dollars — with the amount not meant to cover taxes, the amount of funding available would have been $44.172 million, matched by the city for a three-year spending total of $88.344 million.

Instead, the program will be scaled back to $81.8 million, a difference of about $6.5 million.

City council voted to transfer an east-end reservoir project — planned for 2017 — from capital works funding to the federal Building Canada Fund instead.

The rest of the shortfall will be made up by carrying forward $680,000 from 2011 and 2012 capital funding that wasn’t used.

Council approved the transfer without discussion.

After the meeting, Martin refused to answer questions about the mixup, and walked away without speaking when The Telegram asked whether the province or the city was responsible for the mistake.

Martin’s report, however, says Mount Pearl was also given the same information about capital works funding not including taxes, as well as the later direction that it did.